Possible Ways to Respond to Demand Letters

In my last blog post, we covered the types of entities commonly labeled as patent trolls.  Regardless of intent, the number of assertions and patent infringement court cases are both increasing rapidly.

In order to address some of the perceived issues with patent trolls, the bills in front of Congress include suggestions such as: requiring asserting companies to identify the real owner of the patent, allow more discretion in awarding legal fees to the prevailing party, limiting assertions against end-users of a technology, and allowing more challenges to broad patent claims.

Some proposals from industry observers have gone as far as to suggest that software patents should not be allowed, as a large number of the filed cases involve disputes over software functions.  New Zealand’s Parliament, for this and other reasons, recently voted almost unanimously to abolish software patents.

So, you’ve received a demand letter….

According to industry participants we’ve talked to, a responsible demand letter will include the patent number, the real “parties of interest” of the patent, some specifics of alleged infringement, and an offer to negotiate a license to the patent.  The demand letter will be highly tailored to the specific company that makes an allegedly infringing product.

What is happening in some cases, on the other hand, are form-letter demand letters sent to hundreds of small businesses that use products that include a specific technology feature. These demand letters will often include a fixed sum that the patent owner is demanding, along with a threat of legal action, and it is these types of demand letters sent to end-users of a technology that Congress and the President are addressing with new legislation.

With any demand letter, your options are to not respond, respond with reasons why you feel the infringement is not valid, or to settle with the patent owner.  Before any action is taken, however, you should get as informed as possible.

Here’s some research that you should perform:

- Who is doing the assertion? Is it a subsidiary of some other company or is it a firm hired to protect a product company?  This can be tricky as these organizations often have many subsidiaries.  Once you examine the organization’s family tree, determine how much IP they hold in this subject area; a number of related patents would be an indication they have solid subject matter expertise.

- What is the assertor’s litigation track record?  If you use Innography software, this is a Playbook you can run in less than a minute, and you can also access all of the litigation documents directly from the tool. Alternatively, you can get an account with PACER and perform your research on the entity and any legal representation they may have used. Also, determine the law firms they use and the venues where they commonly file.

- What other patents do they own?  Look at assignment data to see if they have been buying and selling related patents.

- What prior art could invalidate the claim?  There is a surprising amount of overlap in many patents.  Semantic search is an excellent tool for finding related patents, even those that use different terminology, that may invalidate a claim.

- Finally, determine if there are other defendants that have been approached by the assertor. At the least, you can share information with others in a similar position. You may also be able to reduce your legal costs through joint defense arrangements or utilizing the same external counsel that has already been “trained up” on this topic area.

As an Innography user, we’ve created step-by-step instructions to give you the full perspective you need to make an informed decision.  If you don’t have it already, go to the help section of Advanced Analysis and download the “IP AnswerGuide.”

In the next post, we’ll cover proactive protection methods.

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